Published by Atlantic Institute for Market Studies

Menu

Fiscal Management Act a positive option for Atlantic First Nations

(Photo: Destination Membertou)

By Joseph Quesnel, AIMS Fellow

Despite all the doom and gloom we often hear about First Nations in Atlantic Canada, there are some good news stories out there. In particular, it may be news to some that there is an approach to improving First Nations that has strong evidence to back it up.

In 2016, three First Nations from Atlantic Canada were added to the First Nations Fiscal Management Act (FNFMA), which means in 2017 that they now have access to First Nation institutions that have been proven to improve indigenous wellbeing.

The three Nova Scotia-based Indigenous communities that were added to the schedule of the FNFMA were: Acadia First Nation, Paqtnkek Mi’kmaw Nation, and Sipekne’katik.

The FNFMA proves that voluntary outside accreditation is a strong way for First Nations to improve their communities and participate in their local economies.

The FNFMA regime is great because it is voluntary for First Nations and is run by First Nation institutions. With the addition of new bands in 2016, the total number of bands under the FNFMA schedule is up to 211. The FNFMA came into force in 2006, but this option is growing in popularity among First Nations.

The FNFMA allows participating bands to gain authority over financial management, property taxation and local revenues, and financing for infrastructure and economic development.

Through the First Nations Tax Commission, FNFTA-compliant communities can tax real property on reserve lands and raise local revenues. These are own-source funds in addition to federal transfer funds.

The good news? The National Aboriginal Economic Development Board found that First Nations that have real property taxation bylaws tend to have better economic outcomes than those that do not.

The last part of the FNFMA is very important. It allows First Nations to prove they are subject to strong financial management practices and as a result access financing for important things such as infrastructure. First, the bands must receive certification through the First Nations Financial Management Board. To obtain this certificate, a First Nation must have a financial administration law that meets First Nations Financial Management Board standards. Then, finally, the First Nation may access funding through the First Nation Finance Authority. This allows participating First Nations to enter the bond market and access the kind of capital they need at lower interest rates to meaningfully participate in major economic projects.

The First Nation Finance Authority has lent $343 million to 41 First Nations since 2014.

Atlantic First Nations are not new to the FNFMA experience. Membertou First Nation on Cape Breton Island provided one of the best examples of borrowing from the First Nation Finance Authority. That community used its loan to refinance a commercial loan and save over $140,000 a month from the difference in interest rates.

2017 will be interesting to watch as we see what these three Atlantic First Nations do with their new access to the FNFMA.